Australians Move on From Cash to Digital Payments
According a new report from the Australian Payments Clearing Association (APCA), Australian consumers are increasingly giving up cash in favour of cards, mobiles and online solutions. However, the payments industry self-regulatory body noted that unlike cheques, cash will not disappear as a payment method in the digital economy, remaining as a default method if nothing else is available.
The Milestones Report, released Tuesday, shows that Australians are using less cash as the uptake of contactless and other electronic payments continue to gain pace. The number of cash payments has declined 5% since 2005 – down to an estimated 11.7 billion in 2013 – reflecting the changing way in how consumers pay. This decline is predicted to accelerate, dropping a further 20% over the next few years before it plateaus in 2018.
The decline in cash use is supported by recent figures released by the Reserve Bank of Australia. In February 2014 there were 57.3 million cash withdrawals from ATMs – down from 60.0 million in February 2013. The value of these withdrawals dropped 9 percent to $10.8 billion. As the economy grows, cash needs will decline as digital methods dominate new activity.
“We will always have a need for cash, but the take-out here is that cash won’t be the first or only choice for making any payment, regardless of what it’s for,” said APCA CEO Chris Hamilton. “Australians love their “tap and go” cards, and we are going to see lots of competition and innovation in mobile payments in the next few years. Consumers are going to find that cash is not their first choice any more, even for convenience items like a coffee. Increasingly, they may also find that automated, super-convenient consumer services will accept a wide range of digital payments – but not cash.”
According to a separate study, commissioned by the APCA and developed by RFi Consulting, the share of cash within all of the payment transactions made in Australia has dropped from 73% in 2005 to 59% in 2013, with a further share decline forecast to 43% in 2018.
“As the Australian economy continues to grow, so does the total number of payments being made,” said RFi Consulting CEO Lance Blockley. “The fact that the number of cash payments is now decreasing means that this form of payment is not only missing out on this overall market growth but is being displaced from where it was previously used. Australian consumers and businesses are adopting new electronic methods based on a variety of factors, including speed, convenience and security.”
Other key points in the Milestones Report include: